Rate Cut or Not, South African Rand Is in a Sweet Spot

(Bloomberg) -- After the Fed disappointment, it’s now up to the South African Reserve Bank to give impetus for further rand gains.

If the central bank holds rates, as expected in a survey of economists by Bloomberg, the rand could gain based on the preservation of the real interest rate, which is still juicy enough to lure investors looking for yield.

A cut would be no death knell either. Inflation is below the mid-point of the central bank’s 3% to 6% target range. Data shows the economy remains weak, while business and investor confidence has slumped to multi-decade lows, so easier policy would be welcomed by the currency. That was the case in July, when the rand rallied after the SARB’s reduction to the repo rate was seen as supportive of growth.

To contact the reporter on this story: Colleen Goko in Johannesburg at cgoko2@bloomberg.net

To contact the editor responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net

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